Over the past year, large language models capable of writing and refactoring computer code have proliferated. These tools won't really replace programmers, writing code is as much an art as a science, but they can make their jobs significantly more efficient by handling tedious tasks.
New AI platform
In recent months, International Business Machines has launched its artificial intelligence (AI) platform watsonx . The company is focused on helping its enterprise customers train and deploy generative AI models while keeping data privacy and regulatory requirements in mind. IBM has officially launched watsonx Code Assistant. This new AI-powered generative assistant is not a one-size-fits-all tool. Instead, it is tailored for very specific use cases.
One such use case is converting decades-old code running on IBM mainframe systems to a more modern programming language. This may seem like a boring application of such a transformative technology, but it represents a huge opportunity for IBM to keep its mainframe systems relevant and generate additional revenue from its enterprise customer base.
From COBOL to Java
COBOL, or Common Business Oriented Language, is a programming language that has been around since 1959. COBOL is not commonly used to write new applications, due to the prevalence of modern programming languages available. However, it is still prolific in some industries. IBM estimates that 70% of global banking transactions are processed on mainframe systems running COBOL. Another estimate puts the total number of COBOL lines of code in daily use at approximately 800 billion.
The problem is that nobody learns COBOL anymore. It's not taught much in American universities, and even if it were, COBOL is probably considered a bad career move. This puts companies that run COBOL-driven workloads in jail. Rewriting decades-old COBOL code requires specialized talent that is hard to find and creates the risk of disrupting critical systems. Over time, the talent pool of programmers capable of modernizing COBOL applications is shrinking.
Modernisation of applications
This new AI tool from IBM achieves several things. First, it provides a path for mainframe customers to modernize their applications without leaving the mainframe as a platform. Second, it enables IBM to extend its relationship with its mainframe customers. And third, it will provide support for IBM's consulting business. IBM's consulting division will help customers identify applications ripe for modernization and will work with other parts of the company to create custom solutions for clients with specialized needs.
A great advantage for clients is the protection of personal data. Some of these COBOL-based applications are at the core of sensitive and mission-critical systems in the banking and financial services industry. By partnering with IBM and using its watsonx platform, clients can be assured that their data will remain safe.
Enterprise AI strategy
Similar to the hybrid cloud strategy, IBM's AI strategy focuses on helping clients increase productivity, become more efficient and reduce costs. The time, money and potential disruption associated with manually converting legacy COBOL applications to a modern language is likely too high for many mainframe customers to seriously consider this path. With this new AI tool, mainframe customers have another option for modernizing mission-critical applications.
IBM's mainframe business is resilient, but the shortage of COBOL developers has become a burning issue for clients. This new AI tool will help clients bring their mainframe applications into the 21st century, strengthening IBM's mainframe business in the process.
Solid economic results
International Business Machines Corporation reported on October 25 that its revenue for the third quarter of fiscal year 2023 was $14.8 billion, up 4.6% compared to the same period last year.
For the three months ended September 30, 2023, earnings per share improved to $2.22 from $1.81 per share in the same period a year ago.
Revenue increased year-on-year from USD 14.11 billion to USD 14.75 billion.
Commentary on the results by the Director General
"Clients are increasingly adopting our watsonx AI and data platform along with our hybrid cloud solutions to unlock productivity and operational efficiencies. This is helping to drive solid growth in our software and consulting businesses. As a result, we remain confident in our revenue and free cash flow growth expectations for the full year," noted IBM Chairman and CEO Arvind Krishna.
